The e-commerce evolution

Analysis from Descartes

As the government prepares to reveal its strategy to start lifting lockdown measures within the UK to enable people to go back to work and the economy to click back into gear, online retailers, brands and ecommerce businesses will continue to see a huge surge in demand. So, what factors do businesses need to consider now in order to cope with the rise in ecommerce and home delivery? And how can they remain competitive within an increasingly crowded online marketplace? Jonathan Bellwood, VP at Descartes, explains.

An irreversible shift

The imposed lockdown restrictions initiated an irreversible shift towards ecommerce as high street stores shut and people had no choice but to turn to online ordering. Online retail was booming before the crisis, but the impact of Coronavirus has caused many to change their shopping habits – probably for good.

Online grocery shopping is expected to increase by 33% during 2020. The uptake may have started with Coronavirus, but one reason it will continue is that even once lockdown ends, people will still remain risk-averse and want to continue social distancing to remain as safe as possible. They will see going to stores as an unnecessary risk, especially when they could easily have the items they need delivered to their home.

In addition, with some businesses unable to survive the fallout of Coronavirus, once lockdown ends, the high street may no longer be bustling with stores and shoppers. The experience of the high street is no longer what it once was, and is certainly not what consumers are looking for anymore. Retail has become more transactional, with consumers only buying what they need rather than spending time browsing.

There’s also the added cost and inconvenience for consumers buying on the high street: travel, parking etc.. But with consumers becoming increasingly more cost-conscious – especially those that may be furloughed or made redundant – they will try to save money any way they can. And if they can purchase the same products online, at a lower cost and get them delivered cost effectively when and where they want – why wouldn’t they shop online?

Human and automation collaboration

So how can online retailers become more efficient to cope with the potential surges in demand? One crucial element will be boosting workforce numbers. The impact from Coronavirus has meant that huge numbers of staff from the travel, hospitality and retail industries have been left without employment and will be willing and needing to work once they are permitted. There will, therefore, be a large talent pool of potential recruits available to fill up warehouses to support ecommerce companies with peaks in demand.

Some large retailers, particularly in the groceries industry, rely on automation and robotics to meet demand. But the reality is that automation is programmed to produce a consistent output and has a threshold of how much it can push out; it’s not as simple as telling the machines to produce or pick more products, faster. Automation certainly has its place, but not for processes that need to scale on a regular basis.

For warehouses that have adopted a semi-automated process, the collaboration with human workers means that in times of peak demand, they can quickly employ more staff that can be trained up to accurately pick customer orders and send them out. Those businesses that have an optimised Warehouse Management System (WMS) can rapidly increase usage on the system and bring in employees to operate it – humans can upscale and downscale very quickly to adapt to changing demands and economic conditions. But you can’t just bring in more staff without a WMS in place.

Those without a WMS that are clinging on to paper pick lists, manual processes and other unscalable warehouse practices will not have benefitted from the surge in online orders so far because they weren’t in a position to cope. In the hyper competitive online retail ecosystem, failing to meet customer expectations with slow or inaccurate order fulfilment means losing a customer for life. But despite the volume of information an e-commerce WMS handles, both in set-up and use, implementation is far from complex.

With rapid turnaround remote solutions, warehouse management software can be deployed without having to physically visit a site to get up and running. If warehouse facilities are available, a logistics platform can be rolled out in a matter of weeks, not months.

Death of the high street

The decline of the high street has been well publicised for many years, with footfall decreasing and retailers shutting down increasingly year on year. The Covid-19 crisis has now accelerated that decline, so with stores having no option but to close their doors and consumer habits changing for good, we could be witnessing the death of the high street sooner than we thought.

Consumer preference and priorities have now dramatically shifted and companies like Amazon have set the standard for the ecommerce experience. Consumers don’t want or need to visit the high street for their shopping needs – people are time poor and will pay for the convenience of having what they need, delivered where and when they want it. Customer experience still reigns supreme, but the emphasis has changed to convenience.

This is why in the modern retail landscape, fulfilment delivery is now a key differentiator for ecommerce businesses – especially for those that rely on third party logistics providers. Loyalty is vital for all businesses and the impact of a poor delivery experience can significantly alter consumer perception of the brand, potentially causing them to shop elsewhere in the future. The use of technology to optimise delivery efficiency has never been more important.

Catalyst for change

One of the few positives to come out of the crisis is that it will be the undeniable catalyst for businesses to embrace adoption to the new vision of retail. Any businesses holding on to old ways of working and more traditional systems are unlikely to survive through the pandemic. We may still be living in an economic climate that is changing day by day, but there is a clear trajectory for retail that is well underway – businesses need to adapt now or risk failure